In order to enhance transparency in corporate structures by identifying and regulating beneficial owners, prevent money laundering and terrorist financing, strengthen the business environment, and ensure compliance with international standards set by organizations such as the Financial Action Task Force. Cabinet Resolution No. 58 of 2020 UAE Beneficial Owner Procedures took effect on August 28, 2020, replacing Cabinet Resolution No. 34 of 2020 UAE.

Who is a beneficial owner?

Beneficial owners in simple words are a natural person who ultimately owns or controls a legal entity. The ownership could be direct or indirect.

Any individual holding:

  1. 25% or more of shares, or
  2. 25% or more of voting rights is considered a Beneficial Owner.

The control can also be without shareholding that is when they can exercise control through right to appoint or remove most directors or any other form of significant control. If two or more individuals jointly hold or control 25% or more, all of them are considered Beneficial Owners. If no one can be identified as a beneficial owner, then the higher management official will be automatically appointed as the Beneficial Owner.

Scope of application

All entities in the UAE except the ones in financial freezones and entities directly or indirectly owned by federal and local government.

Licensing & Registration of Legal Persons

Entities must submit key information at the time of registration, including:

  1. Name, legal form, Memorandum & Articles of Association
  2. Registered office address
  3. Details of legal representative (for foreign entities)
  4. Details of senior management (passport/ID data)

Register of Beneficial Owners

A register must be maintained by the companies within 60 days of incorporation and should be updated within 15 days if there is any change.

Key details to include:

  1. Full name, nationality, Date of Birth
  2. Address
  3. Passport/ID details
  4. Basis of ownership/control
  5. Date of becoming/ceasing as Beneficial Owners

Penalties for Non-Compliance

  1. A failure to submit an accurate Ultimate Beneficial Owner (UBO) data would lead to a fine ranging from AED 50,000 to AED 1,000,000.
  2. Penalties for Violating UBO Requirements:
  3. First Violation – an initial warning will be given with a demand to comply
  4. Second Violation – A fine of AED 50,000 and should rectify it within 30 days.
  5. Third violation – A fine of AED 100,000 along with a suspension of commercial license for at least 12 months.

The UAE’s Beneficial Owner framework reflects a strong commitment to transparency, accountability, and alignment with global compliance standards. By mandating accurate disclosure of ultimate ownership and enforcing strict penalties for non-compliance, the regulations play a crucial role in combating financial crimes while fostering a trustworthy and well-regulated business environment.

We at Ayesha Aldhaheri Advocates and Legal Consultants, we assist businesses in navigating the UAE’s Beneficial Owner regulations with clarity and precision. We are committed to helping our clients meet their legal obligations while fostering transparency and minimizing regulatory risk.